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Because it shows whether your entire assets are worth more or less than the total of your obligations, your net worth is a solid indicator of your financial health. Net worth may be a key indication when making financial decisions like purchasing a property or company or creating a retirement plan.
Your net worth is determined by adding up all of your assets and subtracting all of your liabilities. It is all you possess minus everything you owe, to put it another way. If you owe more money than you own, you have a negative net worth. If your assets are more than your obligations, then you have a positive net worth.
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